JOHANNESBURG Wholesale Justise Winslow Jersey , June 19 (Xinhua) -- The South African Competition Commission said Monday that it has referred the company Rooibos South Africa to the Competition Tribunal for monopolization of rooibos tea supply market.
Rooibos is the largest processor of rooibos tea in South Africa. In 2015, the Commission received a complaint from a processor of rooibos tea which they investigated. Their probe focused on Rooibos's monopolization of rooibos tea supply from commercial farmers, in order to foreclose its competitors in the processing level of the value chain or prevent the expansion of its rivals in the market.
The Competition Commission said Rooibos remains a dominant player in the processing of rooibos tea because they inherited the assets and the monopoly position previously occupied by the Rooibos Tea Control Board, which was established in 1954 by the previous government. The Board was responsible for regulating the marketing, pricing and research in the rooibos tea industry.
"The Commission is concerned of Rooibos' ongoing anti-competitive conduct, particularly as this hampers the growth of the agro-processing industry in South Africa. Dominant firms have a special responsibility to ensure they do not stifle competition," said the Deputy Competition Commissioner, Hardin Ratshisusu.
The Commission said even though there are 220 rooibos tea commercial farmers,only a limited number contribute the bulk of the total production which is supplied to rooibos tea processors. The processors buy rooibos tea in bulk from commercial farmers, dry it and sell it to local packers and export market. Some new comers in the industry were not happy with the dominance of Rooibos.
The processors used to get their supply of rooibos tea from farmers through one-year supply agreements. In 2014 Rooibos introduced exclusionary contracting strategies to lock-in or foreclose the supply of rooibos tea from farmers, thereby starving its competitors of access to a product that only grows in a small geographic region. The company entered into a long contract from 2014 to 2018.
Rooibos demanded that farmers supply half of their production to them to access its production research output. This was after the collapse of the research function undertaken by the South African Research Agricultural Council in 2014. The Competition Commission said exclusionary contracting strategies were meant to shut out commercial farmers by ensuring that they preferred Rooibos thereby affecting the competitors.
The Commission has referred the complaint to the Tribunal for adjudication and seeking an order declaring that Rooibos has contravened the Competition Act. The Competition Commission want the Tribunal to fine Rooibos an administrative penalty equal to 10 percent of its annual turnover.
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